Aditya Birla Fashion and Retail Ltd. has lined up capital expenditure of Rs 500 crore this financial year. A big focus for the company will be revamping its loss-making entities – TCNS Clothing, Tasva and TMRW – and making them profitable by next fiscal.
The largest increase in margins going ahead will come from turning around the businesses that are currently losing money and reducing overall profitability, ABFRL Managing Director Ashish Dikshit told investors in a post-earnings call. "TCNS being the largest, Tasva being the second, and TMRW being the other. These are businesses which are actually suppressing the margins that other profitable businesses make."
In September 2023, ABFRL acquired a 51% stake in TCNS Clothing, which owns women's ethnic brands like Aurelia and W. Tasva is a men's wedding and occasion wear brand, which was launched in partnership with designer Tarun Tahiliani in December 2021. TMRW is focused on digital-first fashion and lifestyle brands such as Wrogn and Bewakoof.
Excluding TMRW, Dikshit expects ABFRL to be Ebitda-positive in FY26. The entire portfolio is likely to be profitable by the financial year ending March 2027.
The retailer also expects to raise more funds for TMRW this fiscal.
ABFRL, with a sharpened brand portfolio and gross cash balance of Rs 2,350 crore following the recent fundraise, aims to expand aggressively in a bid to triple its revenue and double its profitability over the next five years.
The expansion comes at a time when consumers are cutting budgets across discretionary products.
While the wedding season is aiding the ethnic portfolio, the underlying demand remains subdued, marred by cautious consumer spending and low footfalls.
"There are wedding dates which have come in the June quarter versus last year. To that extent, the wedding parts of the businesses have the benefit of those dates. But I don't think that reflects the underlying state of the economy and consumption situation," Dikshit added.
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